Fewer stores are expected to open in 2009, and about 3 percent of retailers could fail and close, said Michael Niemira, chief economist for the International Council of Shopping Centers Inc. The ICSC predicts the holiday season will likely show the weakest sales in nearly 40 years.

But Niemira said he expects the economy will improve and business will pick up for retailers by the end of the spring.

"It really will come down to survival of the fittest," said Birmingham-based retail consultant Ed Nakfoor. "At the end of the day, people are still shopping and working like they were before, but I think the freewheeling days of opening stores or keeping failing stores open is over."

Local businesses and Ann Arbor locations for national chains been hurt by slow sales as a direct result of the economy. For instance, longtime Ann Arbor area business Wilkinson Luggage went out of business this past year and just last week, Ann Arbor specialty grocer Bello Vino announced it would close. Kitchen Port President Roberta Shrope has put that store in Scio Township up for sale, after a 40 percent drop in holiday sales left it owing creditors.

Linens'n Things, Steve and Barry's and La-Z-Boy Furniture Galleries in Ann Arbor also announced closures this past year - all due to the economy, as well. Ann Arbor-based Borders Group Inc. has announced plans to shutter five of its U.S. stores, although none are in Michigan.

More closures expected

Analysts and some local folks connected to the retail industry think more closures will be announced in the coming weeks, by both small family-owned shops and large chain stores.

Leisa Thompson | The Ann Arbor NewsThe weak holiday retail season just might push the biggest number of retailers since Jimmy Carter was president to close or declare bankruptcy, analysts predict for 2009.

Among other changes that shoppers are likely to see in 2009, according to retail experts:

• Large discount generalists like Wal-Mart, Meijer and Costco will crowd out smaller or more specialized retailers.

• Stores will have leaner inventories and reduce the number of markdowns they offer. However, prices in general will be down.

• Many chain retailers will cut back on stores and focus on their money-making locations and online sales.

Consumers in 2009 are expected to cut out more "wants" in favor of "needs," and will put off larger purchases such as cars and appliances by repairing what they already have - which will continue to hit retailers hard, said Nakfoor and Ken Dalto, a Farmington Hills management consultant who follows the retail industry.

"There's more of a spread between the leaders and the laggers," said Larry Freed, president and chief executive officer of Ann Arbor-based Web site satisfaction company ForeSee Results. Freed said he expects online retailers will rebound faster than their brick-and-mortar counterparts.

Decreases expected

The Michigan Retailers Association said 17 percent of its retail members expect higher sales during the December to February period over the same period last year. But 58 percent expect a decrease and 25 percent expect to hold steady in the coming months compared to last year.

While Dalto expects Ann Arbor to remain more insulated from the state's economy than other Michigan cities, there could be additional closures here and vacancies could rise, causing another problem. "People don't go to malls that are half full," Dalto said.

Briarwood Mall's low vacancy rate helped the shopping center weather the sluggish holiday shopping season, said Ida Hendrix, the mall's general manager. Judging from what she's heard so far from a few retailers and from how full the parking lots were, she said she expects sales to be down, but not as much as many feared. "People shopped conservatively, they were shopping smarter and, this year, they expected the discounts," she said.

The story was similar in downtown Ann Arbor.

"We are looking at some closings in the first quarter," said Newcombe Clark, president of the Main Street Area Association and a partner at Bluestone Realty Advisors. "The one interesting thing is that downtown is full, there are maybe one, two or three vacancies and some of it is fresh, from people just moving around."

Clark said as retailers close in the coming months, some landlords may need to drop the rent they're asking for in order to attract new tenants.

And yet some businesses are thriving.

Downtown Home & Garden had its best year of sales and its second best Christmas season ever, said owner Mark Hodesh.

"It doesn't mean I had any confidence. It doesn't mean I didn't worry every day. I did," Hodesh said. But the store's niche is practical products and was boosted what he described as an increased concern from loyal customers in shopping at the business because of poor economic news. He's heard other, more established Ann Arbor businesses benefited from the same phenomenon.